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9-702-458
REV. FEBRUARY 28, 2002

TARUN KHANNA
LOUIS P. DiLORENZO, JR.

Morgan Stanley Japan, 2002
Thierry Porte, president of Morgan Stanley Japan (MSJ), had spent the brisk November day in
Tokyo with Eric Best, Morgan Stanley’s head of Scenario Planning, outlining the exercise that all of
the managing directors in Japan would be participating in shortly. While the scenario planning
exercise was usually an intense experience for everyone involved, this year promised to be
particularly challenging. Japan remained mired in recession and frustratingly unresponsive to
attempts to stimulate economic activity. The U.S.-led worldwide economic slowdown, partly
triggered by the post-September 2001 war against terrorism, complicated the situation and
contributed to tough times within the investment banking industry. Porte had been at the helm of the
Tokyo office since 1995, and had grown it to a revenue base of $1.2 billion and 1,500 employees
(Exhibit 1), to a point where it contributed healthily to the firm’s bottom line and was its second
largest non-U.S. office (after London). He contemplated whether this was the time to invest further in
Japan, to maintain course, or to actively steer resources out of Japan.

Evolution of Firm Strategy in Japan
John McGeehan, chief operating officer of MSJ, noted, “Our business has been a series of rising
plateaus. Each plateau is triggered by reform and change in response to crisis.” During its early days
as a two-person “corporate finance outpost” starting in November 1970, MSJ focused on developing a
beachhead within the Japanese banking community. MSJ served a select client base of local
companies (Mitsubishi, Nippon Steel) and also helped a small but influential group of U.S.
companies (General Motors, Exxon) with access to Japanese financial institutions.
As Japanese corporations began their period of global expansion and acquisition during the early
1980s, MSJ achieved a strong position as an underwriter of yen and non-yen debt and equity based
on its knowledge of global markets. These early successes in M&A advisory services allowed MS to
build client relationships and establish itself as a viable player in the foreign banking community.
Additionally, the acquisition of a securities license in 1986, when MSJ was among the first companies
to receive membership on the Tokyo Stock Exchange (TSE), helped to expand their product offerings.
During the mid- to late-1980s, MSJ grew in importance to the firm as Japan evolved into a major
capital-exporting nation. Morgan Stanley personnel from New York and London flooded into the
Tokyo office in response to business opportunities. Porte commented, “It used to be that traders in
________________________________________________________________________________________________________________
Professor Tarun Khanna and Louis P. DiLorenzo, Jr., MBA 2002 (with assistance from the HBS Research Centers in Hong Kong and Tokyo)
prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of
primary data, or illustrations of effective or ineffective management.
Copyright © 2002 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical,
photocopying, recording, or otherwise—without the permission of Harvard Business School.

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702-458

Morgan Stanley Japan, 2002

New York and London would wait for Tokyo to decide what to do today. Professionals in the Tokyo
office were folk heroes. In Japan, we didn’t get a lot of sleep.”
The early 1990s provided a hiatus. Following the post-bubble deflation in the early 1990s, crossborder activity dried up, and the focus shifted to domestic business. MSJ’s prominence within
Morgan Stanley declined. Talent was reallocated towards China and elsewhere in Asia. Porte
described this as ambassadorial work for the firm. “We were in the education business with clients in
Asia, as were Goldman, Sachs, Merrill Lynch, and others.”
The mid- to late-1990s saw a renewed interest in restructuring opportunities in Japan, however.
The firm’s merger with Dean Witter in 1997 underscored the interest of major players in the
globalization of retail finance. Thus, Morgan Stanley Dean Witter Nippon Limited opened retail
securities outlets in Tokyo in January 2001. By November, however, the firm announced that it would
terminate this effort since it could not see when it could stem losses there.

Current Strategy
MSJ’s business model was a balancing act between benefiting from its parent firm’s international
reputation and expertise on the one hand, and tailoring its strategy to the local environment on the
other. Porte noted that compensation, at 45%-50% of revenues, constituted the biggest element of the
worldwide cost structure of a premier investment bank. Relative to the multinationals operating in
Japan, a higher component of the cost structure of the local Japanese securities firms was fixed. This
was partly due to their greater retail infrastructure and partly because the structure of professional
labor markets in Japan was such that compensation was harder to adjust. The premier global firms
like Morgan Stanley tried to compensate their professionals similarly across the world, though this
was achievable only within limits, especially when the cost of living in Tokyo was roughly twice
what it was in New York. Porte estimated that, while there was overcapacity in both the wholesale
and retail Japanese financial sector, there was probably room for three or four multinationals to
profitably co-exist along with two purely domestic players in the medium- to long-term. Takatoshi
Yamamoto, head of Equity Research, maintained that “it is important that there is one pure Japanese
investment bank.”

Products
Stephan Newhouse, chairman of Morgan Stanley International, commented from his London
office, “We have invested a lot to become a diversified firm. We are not an M&A house like Lazard,
or a fixed-income specialist like Lehman. Our range of products, and worldwide presence, has served
us well over the years.”
MSJ, like other leading U.S. investment banks, took a different stance with respect to product
innovation than did its Japanese competitors. MSJ executives speculated that this might have to do
with different approaches to dealing with the ambiguity that accompanied most new product
introductions. “In the U.S. there is a concept of ‘no action letter,’ which means that you can write to
the authorities to request clarification of a practice. If they say it is not okay, you merely stop the
practice and no action is taken. There is no such mechanism to clarify the legitimacy of experiments
here.” Commented a lawyer, “You hear the term ‘gray area’ in Japan a lot when new instruments or
new trading practices are introduced. Faced with ambiguity, a Japanese financial institution will
typically ask the regulator whether the practice is okay. A foreign institution will consult its legal
counsel and make its own judgment. If the counsel says it’s not illegal, the firm will proceed on the

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Morgan Stanley Japan, 2002

702-458

grounds that the practice is legal elsewhere.” Some speculated that the greater prevalence of
securities lawyers in the United States seemed to have bred a tolerance for experimentation in U.S.
investment banks that was absent in Japanese firms.
This willingness to experiment and a repertoire of capabilities developed in Morgan Stanley’s
global operations kept MSJ on the forefront of change. As an example, their global experiences
allowed them to identify securitization opportunities effectively, to use their own capital to take
positions, and to use their international reach to distribute effectively. Another example was
provided by the way in which MSJ had leveraged their global franchise in real estate lending to build
a business in Japan. The real estate market, at two-thirds the size of the market in the United States,
offered huge opportunity. According to Porte, “there was initial skepticism about the attractiveness
of investing in Japanese real estate, and only one professional was committed to the sector, primarily
in order to understand the market opportunities. This number has since grown to 60, and we own
thousands of properties. We will invest more in Japanese real estate than in any other single market.”
Commented another executive, “The major difference between investment banking in Japan from
that in Europe or the U.S. is the fact that assets are being sold at distressed values. This is an
important overlay over traditional underwriting and advisory business.”
Tom Riley, in charge of MSJ’s back-office function, explained why MSJ’s reputation stood it in
especially good stead in Japan’s distressed environment. “Unlike in the U.S., securities settle in the
morning and cash in the afternoon, so there is an intra-day period when trading parties trust each
other. There is especially heightened credit risk exposure for offshore trades. If every party has a
AAA rating, then this is a manageable system, but not so in the face of distress. So liquidity has dried
up, and reliable parties are at a premium.”
On the other hand, MSJ had been forced to stay away from many domestic transactions since it
lacked Japanese retail distribution. The size of the retail opportunity—given the over $10 trillion in
retail assets—was bigger than that in Continental Europe or the United Kingdom. Given this size, all
major U.S. and European banks had tried to get at this opportunity; all, except the Nikko Salomon
joint venture, had failed. MSJ’s own effort commenced in early 2001, but was aborted by November.
Given the continued poor performance of the stock market and growing concern by Japanese
individual investors about the economy, many were unwilling to pull a significant portion of their
savings out of bank accounts, even though the latter provided miniscule returns (of the order of
0.5%).
The lack of access to retail distribution meant that there was a tremendous amount of local
investment banking that MSJ was unable to touch, though one executive observed that real estate
lending allowed them to intermediate between Japanese firms in a way that other product areas did
not. The absence of retail access skewed the firm toward advisory work and cross-border equity and
debt capital market activities. Masayoshi Nakamura, the head of M&A, thought that the key to
continued M&A activity was that the Nikkei not drop too precipitously, and that there remain
continued external pressure on Japan. Such pressure could be affected by all kinds of seemingly
unrelated reasons, for example, the war on terrorism and the evolution of competitiveness of Chinese
firms.

Research
Robert Feldman, head of MSJ research and active user of scenario planning techniques, illustrated
the differences in the nature of research using a map of research styles: one axis had a ‘statistics’
versus ‘stories’ dimension, the other had a ‘facts’ versus ‘models’ dimension. “People want to hear
things told different ways, depending on where they are from and the type of work that they do.”
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702-458

Morgan Stanley Japan, 2002

Feldman labeled the statistics plus facts quadrant as ‘technical’ analysis; the statistics plus models
quadrant as ‘econometric,’ which represented U.S. style analysis; the stories plus facts quadrant as
‘journalism,’ which represented the Japanese flavor of analysis, as well as what suited small cap
stocks and newly developed products; the stories plus models quadrant as ‘theory,’ representing the
U.K.’s preferred analytical style. “When I am in the US, I put together a much more economicfocused story than the journalistic one that I would tell in Japan, despite the fact that I am providing
the same set of recommendations.”
These differences in research styles arose partly because of differences in the ways in which
information was disseminated in the capital markets. For example, the Japanese had different rules
about what constituted insider information than the United States. An analyst who learned the sales
of a firm before it was publicly disclosed, and passed this information on to clients, would be ‘adding
value’ in Japan, but violating insider trading rules in the United States. Feldman speculated that
improved disclosure would, over time, affect the value of relationships.

Marketing
McGeehan articulated MSJ’s marketing challenge thus, “Corporate Japan has only realistically
allowed us to call on them for two years now. Investment banking, for foreign firms, used to be a
walk in the desert for the first 28 of our 30 years in Japan. Firms like Nomura and Daiwa have been
calling on even those whom we consider our best clients for over 75 years. It’s a tough position.” The
foreign investment banks had taken different approaches in the face of such strong relationships.
Goldman, Sachs, for example, had been characterized as the “farmer,” seeking to replicate longerterm relationships, while MSJ had been described as a “hunter” targeting growth areas strategically.
There was a pricing challenge associated with the approach of bringing into Japan products that
had already been successfully used in the United States or Europe. First-movers could not maintain
their pricing advantage for nearly as long as they might have been able to had Japanese market
participants not been able to observe comparable prices in other countries. Thus cross-border
information flows had led to measurably greater competitive intensity.
But perhaps the greatest marketing challenge came with the prospect that, if the situation in Japan
deteriorated further, MSJ could find itself in a position where the government became the biggest
potential client overnight, and one for which they did not have an explicit marketing effort. A
glimpse of the associated complications emerged when MSJ acted as an adviser for the reprivatization of Nippon Credit Bank, following its nationalization due to its nonperforming loan
problem. A member of the Diet (legislature) requested that MSJ disclose the amount that it was paid
in fees, in order to judge the fairness of the transaction. Yuki Kohei, head of the Financial Institutions
Group, explained, “Of course, the difficulty is that we cannot prove that the government would have
realized much less revenue without our involvement, so the fairness of the fees is hard to establish,
especially for unique transactions.” Several senior MSJ executives expressed concern that a related
and very serious marketing challenge was for the firm, given its foreign parentage, to endeavor not to
come across as benefiting from Japan’s distress. The issue would assume prominence if investment
banks played the same role in distress that they had during the U.S. Savings and Loans crisis, when
they were involved in selling the assets of the Resolution Trust Corporation back to the public.
James McGill, chief technology officer, expressing relief that MSJ had set up a group to focus
explicitly on marketing, commented, “It’s a miracle to me that Wall Street firms don’t generally have
marketing departments. They are dominated by a financial engineering mindset amidst a
transactional culture.”

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Morgan Stanley Japan, 2002

702-458

Human Resources
Feldman crystallized the central human resources dilemma. “One group says that this office is
Morgan Stanley, applied to Japan. The other says this is Morgan Stanley JAPAN, that is, keeping
New York off our backs is important. There is a healthy tension between the two views.” In recent
years, given its past import of foreign human capital into the Tokyo office, MSJ had focused on
building a more local face in the community. In an effort to minimize recruiting costs and attract
young, qualified candidates, MSJ launched a program in 2000 to provide Hitosubashi University’s
MBA program with instructors in the area of finance and corporate strategy. But the challenge of
evolving from a U.S. firm in Japan to a boundaryless multinational was more than a recruiting one.
Nakamura added, “To be a Japanese firm, we have to ask, how do we evaluate people going
forward? Will we be able to value someone who understands Japan-specific things but doesn’t speak
English?”
MSJ could draw on Morgan Stanley’s worldwide talent pool, as well as contribute to it. Porte
pointed out that resources were kept thin on the ground in Tokyo in the early 1990s, and
redeployment to help jump-start the Hong Kong office—from where Morgan Stanley served China
and the rest of Asia—took place. Following 1997, this talent allocation was reversed, however, to the
extent that Porte commented that he had personally gone from making ten trips per year to China to
just one, spending most of his time in Tokyo and New York. Exhibit 2 shows the recent evolution of
headcount at MSJ.

Information Technology
McGill characterized information technology (IT) needs as serving three distinct types of
businesses: foreign-local, local-foreign, and local-local. “Foreign-local is MSJ representing foreign
firms in Japan, local-foreign is the converse. We are active here. We do virtually no local-local, which
is dominated by the likes of Nomura, and has quite different IT needs. For example, it does not need
software to perform cross-border tax optimization. It does not need bilingual software, and therefore
can rely on a broad range of independent vendors available in Japan. In contrast, we do our
development internally or rely on contractors in China and India to develop software for us.”
Becoming a more Japanese firm would therefore raise significant IT challenges.
Further, the IT needs varied quite extensively by type of business. MSJ’s IT spending on
institutional versus retail functions varied in proportion to the revenues that these businesses
brought it (roughly $1 million/head versus $300K/head). Trading often required even more support.
McGill estimated that MSJ’s IT bill would rise 50% (up from it’s current 9% of revenues) if it did
not rely on Morgan Stanley’s global IT infrastructure. For example, MSJ used Brooklyn facilities for
the back-office function. They would have to switch to back-office facilities provided by Nomura in
Tokyo, which would also reduce MSJ’s flexibility.

Scenario Planning
The logic underlying scenario planning, initially developed for military uses, and pioneered at the
Hudson Institute and at Royal Dutch Shell in the 1960s and 1970s, was that it was impossible to
predict the future, but possible to construct a reasonable set of ‘futures’ to encompass divergent
possibilities. Proponents believed that scenario planning helped ward off a natural tendency of
human beings to disengage when confronted with enormous complexity. The techniques were used
by the likes of HP, Monsanto, and UPS.
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702-458

Morgan Stanley Japan, 2002

Eric Best had helped the firm conduct 30-plus scenario-planning exercises over the past five years,
on topics such as European Monetary Union, Year 2000, Global Derivatives, and the effect of
technology on the client interface (Exhibit 3). “We have learned how to build a parallel processor out
of human beings. The idea is to structure the flow of information into that parallel processor, so that
individual and collective intelligence will produce powerful insights. It’s remarkably versatile. For
example, these days I suspect it’s worthwhile applying scenarios to the House of Saud and the effect
of its collapse on global finance. The scenario method takes advantage of the opening up and
flattening out of information in the networked knowledge economy. There is a lot of information on
the front lines. It makes strategy development a more powerful, living thing. If done right, the result
is a set of compelling stories that engage, provoke and challenge in important ways because they are
interesting, plausible, relevant and useful. They are narratives, not predictions, that help re-order
perceptions about the way in which the future will play out.”
He described the process of scenario planning as involving the following steps. “Identify the key
uncertainties. Identify the key questions in the minds of stakeholders. Brainstorm to find a list of 100
things that matter. Identify the most important and the most uncertain list. Sit in a room and talk
until we agree how to reduce this to two dimensions. Each of four quadrants contains a story, a
narrative, for how things could evolve.”
MSJ was an early convert within Morgan Stanley to the value of scenario planning, having done it
for five years already. Porte pointed out that each exercise ended with their identifying ten action
items, on which they had an average execution rate of 75%. The planning process itself was
enormously useful in building shared understanding in the multi-cultural office, and in
communicating this understanding to their clients. The exercise conducted with 38 senior executives
over two days in November 1997, in the wake of Japan’s Big Bang, provided an example (Exhibit 4).
The outcome was to identify four scenarios, delineated by an axis that measured whether Japanese
markets rose or fell, and another that delineated whether reform sped up or stalled. “MOF (Ministry
of Finance) Rules” captured the “markets up, reform slows” scenario; “Sunset, Sunrise” captured
“markets down, reform slows”; “Dinosaur Tails” captured “markets down, reform speeds up”;
“Greed wins/Japanese Olympics” captured “markets up, reform speeds up.” Exhibit 5 shows the
trajectories graphed by managers in similar exercises in 1998 and 1999 to indicate what they thought
the likely evolution of the situation would be like over the immediate future. Porte commented, “The
key insight for us was that things were going to get a lot worse before they got better. Accordingly,
we stayed away from investing in retail, at a time when Merrill went ahead in a big way. We also
identified opportunities that existed in an increasingly distressed economy, and invested
appropriately, rather than divesting and withdrawing. We realized the importance of engaging with
the government and regulators to affect financial market evolution. Finally, we discovered that we
had to communicate extensively with New York, so that the negative headlines about Japan did not
get ahead of the message the Tokyo office wanted to send the firm.” Nick Turner, London-based coorchestrator (with Eric Best) of MSJ’s scenario planning exercises, added, “The 1999 meeting focused
specifically on client-centricity and e-commerce strategy. Tokyo emerged as the test-bed for much of
the innovative technology used by the firm, both to conduct business with clients and to
communicate internally.”

Conclusion
In the excitement preceding the scenario planning exercise, several members of the participating
senior management team communicated their thoughts to Porte and Best. Best’s analysis of premeeting questionnaires sent to managers suggested greater variation in opinion regarding the
attractiveness of the business environment for MSJ going forward that there had been in any of the
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Morgan Stanley Japan, 2002

702-458

previous three years. The diversity in opinion mirrored uncertainty in managers’ perception of the
substance of reform and the likely pace of change. In addition, several voiced their instincts. Riley
pointed to the cranes that dotted the horizon outside the office window. “These are not government
projects. They represent genuine private sector construction. There are good companies in Japan. The
question is, will Japan end up lying on its back in 3 years if Koizumi fails, or will these good
companies be allowed to join the select few already on the world stage?” Newhouse commented,
“The long-term secular trends give us a 25-year optimism regarding Asia—growth from a low base,
talented labor pool, work ethic like the U.S. several years ago. But we have to figure out whether
there is a realistic way for us to penetrate the opportunity represented by the smaller institutions and
individual investors in the domestic market. I can’t think of any other location in the world where
cultural issues appear to preclude customer interaction with gaijin [foreign] firms as much as they do
in Japan.” Mused another executive, “What if things go really sour in the U.S.? It’s hard for me to
imagine that we’d retrench in Europe in that event. But how important is Japan to a major investment
bank?”
Best pointed out that MSJ had a responsibility to engage with Japan’s problems. Morgan Stanley’s
vision statement took pride in the idea of global citizenship, and in the notion that the firm aimed to
encourage the growth of a middle class worldwide, and to educate people to “save” intelligently.
There was also an imperative to deal with the allocation of wealth around the world, or increasingly,
a class of have-nots would take things into their own hands. Finally, there was a huge opportunity.
“Japan is one of the highest savings rates countries in the world, and has the lowest return on these
savings. If this does not spell opportunity, I do not know what does. Investment banking is the
process by which values turn into value, and by which value is propagated across boundaries. Japan
is the ideal location to get investment banking truly up and running.”
But how was MS to lead MSJ to this latent value? Several had urged that the evolution of
European financial markets offered a useful guide. Porte was circumspect about this. “By statistics
like size of capital markets, ratio of M&A activity to GDP, etc., it is true that Japan looks like Europe
did ten years ago. But one has to be wary of statistical comparisons misleading here as much as they
illuminate. Unlike Europe, Japan is one market, one language, and one legal system, even if it does
not always work particularly well. Japan faces dramatically different economic, social and
demographic issues. Finally, Europeans did things primarily by European considerations—Germans
decided to unify, the French wouldn’t let the Germans get ahead, the U.K. decided to cooperate in its
own island-like way. In contrast, the Japanese have their eyes on the U.S. The points of comparison,
the frame of reference, the benchmarks, and the impetus for change, all comes from the U.S.”
Best offered some thoughts on the importance of noneconomic considerations in peering into the
economic future. “For 900 years, there have been stone gardens in Kyoto tea houses that have been
raked in a particular way. For centuries, artists in the Nihonga style have painted essentially the same
scenes. That’s their concept of advancing art. It does not seem to admit dramatic change if left to its
own devices.”

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702-458

Morgan Stanley Japan, 2002

Exhibit 1

Morgan Stanley Japan Limited Tokyo Branch (off-shore revenues)

Mar-97
Tokyo

Mar-98a
Tokyo

JPY mil.
Mar-99
Tokyo

Mar-00
Tokyo

Mar-01
Tokyo

Commission received

33,548

46,667

62,509

60,976

63,505

Trading P&L

48,266

41,152

25,741

14,170

45,333

Interest income

10,524

17,213

14,788

23,072

27,585

92,338

105,032

103,038

98,218

136,423

42,388

43,463

28,095

22,902

32,306

49,950

61,569

74,943

75,316

104,117

Total Revenue
Interest expenses
Net Revenue

Average FX (JPY/USD) rate
(Apr-Mar) = 12 month avg.
of NY month-end spot

Source:

113.300

123.541

128.318

110.057

111.67

Morgan Stanley Japan, January 2002

aSince Mar-98, accounting has been changed from Lower of Costs or Market basis to Mark-to-Market basis.
bBy comparision, Morgan Stanley’s 2000 Worldwide gross and net revenues were $45,413 USD and $26,427 USD respectively.
(source: Morgan Stanley 2000 10-K)

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702-458

Exhibit 2

Morgan Stanley Japan Headcount

Division Description

Headcount
3/31/97

Headcount
3/31/98

Headcount
3/31/99

Client Support Services

Headcount
3/31/00
11.00

Consumer Banking Group, International
Enterprise Information and Services
Equity
Equity Financing Services

Headcount
3/31/01

Headcount
12/31/01

2.00

Company IT

16.00

15.00

1.00
38.00

47.00

52.00

51.00

38.00

40.00

129.70

146.00

142.25

149.10

180.50

165.50

6.00

5.00

6.00

6.00

10.00

10.00

Equity Infrastructure

37.00

58.00

67.00

84.00

92.00

91.00

FID Infrastructure

55.00

59.00

66.00

67.00

82.00

84.00

Finance

65.00

67.00

73.00

88.00

85.00

76.00

129.00

129.40

152.95

154.60

168.70

172.00

4.00

49.00

106.00

2.00

Fixed Income
IAS Japan
IBD
Institutional Risk and Reporting
Institutional Securities Management
Investment Management

30.30

43.30

74.80

115.60

175.80

229.50

2.00

7.00

5.00

5.00

16.00

18.00

7.50

7.00

8.00

8.00

11.00

10.00

25.00

45.00

52.00

57.00

60.00

68.00

17.00

29.00

33.00

23.00

13.00

15.00

21.00

24.00

33.00

33.50

5.00

4.00

Investment Management—TK Funds Bus.
Law
MSCI

2.00

3.00

3.00

2.00

MS Services

7.00

8.00

6.00

3.00
1.00

2.00

2.00

54.00

69.00

76.00

73.00

Private Wealth Management

1.00

1.00

Research

39.00

45.00

Strategy and Administration

47.50

55.50

56.00

59.00

68.00

66.00

Technology

83.00

84.00

113.00

127.00

170.00

175.00

717.00

826.00

973.00

1,161.00

1,429.00

1,357.50

Sum

Source:

-9-

Morgan Stanley Japan, January 2002; By comparision, in 2000, Morgan Stanley had 62,679 employees worldwide (source: Onesource company data)

This document is authorized for use only by gloria musarra (gloriamusarra@hotmail.it). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies.

702-458

Exhibit 3

Morgan Stanley Japan, 2002

History of Scenario Planning at Morgan Stanley

Global Equity
Derivatives
Oct ‘98
Mar ‘01
Client Technology
Dec ’95

MSIM
Fall ‘97
April ‘00

Future of the Client
April & June ‘99

DCMS
Oct ‘ 99

European
Infrastructure
Jan ‘00

SIA Y2K
Future of the
EFS
Fall ‘97
Infrastructure
Sept’ 98
August ‘99
EFS
Y2K Business
EMU
June ‘98
Risk
Spring
‘97
Nov’98 - 00
HK/China
Senior Mgt.
European
Feb 2000
Summit
Global Equity
Credit Markets
Mar ‘98
EFS
Strategy
April ‘00
Jan ‘99
FX
Oct’ 98
July’98
Jan ‘00
Europe
Sept ‘99
IED
Jan ‘01
Oct ‘99
Telecoms
FIG
Mar ‘99
Sept’ 01
April’ 01

MSIT Strategy
Fall ‘96

Credit Risk
April ‘99
Japan
Nov ‘97
Dec ‘98
Dec ‘99
Nov ‘00

Source:

Exhibit 4

Morgan Stanley Japan 1997 Scenario Planning Exercise

1997 “Big Bang” Scenarios
+
“Japanese Olympics”
Markets

“MoF rules”

Surprise
Slow

Pace and nature

of Reform

Fast

“Sunset, Sunrise”

Economic

Expectation
“10,000 by 2000”

Source:

10
This document is authorized for use only by gloria musarra (gloriamusarra@hotmail.it). Copying or posting is an infringement of copyright. Please contact
customerservice@harvardbusiness.org or 800-988-0886 for additional copies.

Morgan Stanley Japan, 2002

702-458

Exhibit 5 1998 and 1999 Opinions Applied to 1997 Morgan Stanley Scenario Planning Exercise
Framework

+

“Japanese Olympics”

Markets

“MoF rules”

Pace and nature

of Reform

Fast

Economic

Slow

“Sunset, Sunrise”

+

“Japanese Olympics”

Markets

“MoF rules”

-

“10,000 by 2000”

Pace and nature

of Reform

Fast

Economic

Slow

“Sunset, Sunrise”

-

“10,000 by 2000”

Source:

11
This document is authorized for use only by gloria musarra (gloriamusarra@hotmail.it). Copying or posting is an infringement of copyright. Please contact
customerservice@harvardbusiness.org or 800-988-0886 for additional copies.


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